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Murat Armbruster …

Murat Armbruster
Director, Green Capital Global Challenge
Senior Advisor, Carbon War Room
October 14, 2011

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  • Right side: leave to governments to subsidize because will never be cost effectiveLeft side: businesses stand to gain if provided with the information and tools/technology/legislation to do so
  • + diffusion of decision-making centres
  • Fragmented and Lack of Standardized Market Not cost effective for large players to enter market Lack of homogeneity results in high cost of capital Private capital sitting on sidelines New products don’t fit typical municipal finance model Regulatory risk (PACE) Pricing challenge of capital Performance uncertainty, lack of generally accepted MRV City staff lacks new model finance expertise and/or capacity to adequately vent new opportunities Market Demand Unclear Split incentive issue with landlord tenants Lack of successful programs for precedence Often hostile utilities pushing back on programming

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  • 1. Carbon War Room Presentation at 51stUCEU GA Conference, Vilnius 2011Financing Change: Green Initiatives and Technologies Implemented in Cities Murat Armbruster Director, GreenCapital Global Challenge Senior Advisor, Carbon War Room October 14, 2011
  • 2. Intro to the Carbon War RoomEntrepreneurial Independent Non-Profit Gigaton-Scale, Market-Based, Solutions To Climate Change 2
  • 3. Our Focus on Climate Wealth Other Innovations Carbon 40 Capture & Storage Non-Energy 20 Renewable Low- Energy Carbon Fuels$/ton of CO2 0 Manufacturing - 20 Carbon War Room chases the >50% of the climate solution that makes Transportation great business sense right now… - 40 Buildings Source: McKinsey & Co. 3
  • 4. CWR Role – Accelerating Capital Capital Policy Technology (not enough) (not the bottleneck) The Market Increase information Reduce Transaction Costs (the common end-goal)
  • 5. A Green Capital & Green Mayor 5
  • 6. Mission of the Challenge Help Standardize the Energy Efficiency Industry to Foster Market Conditions which Promote the Wide-ScaleDeployment of Private Capital into the Urban-based Retrofit Market 6
  • 7. “EE Harmony” – Matching Capital & Cities EVERY STEP IN VALUE CHAIN NEEDS TO BE SMOOTH FOR CAPITAL TO FLOW Market Legal Program Capital Marketing Analysis Design Wide range of Marketing and Huge Programs can Who will financial outreach Variation in killed from administer the products; city critical to how poor program? austerity success of any building legislative What role measures program yet segments design (i.e. does the city requires 3rd often treated as are defined PACE) play? party capital for after-thought scale 7
  • 8. Greatest Challenge: The Capital
  • 9. 5-75% C02Reduction Potential• 1-10%Behavior changes – (turning lights off, using stairs instead of elevator)• 5-30%Technology – (installing energy management software, retro and continuous commissioning, optimization)• 10-50%Simple Retrofits – (lighting, Energy Star appliances, insulation)• 20-75%Deep Retrofits – (HVAC, boilers, windows, building envelope)
  • 10. Global Reach : Local Action North America Financing Retrofits Europe• District of Columbia • 3rd Party Off-Balance Sheet • Copenhagen• New York City • Property Tax Bill Financing •Rotterdam• San Francisco • Utility Bill Financing • London• Vancouver • Vendor Financed • Vilnius• Toronto • Traditional Debt • Berlin* Asia/ Pacific • Beijing • Auckland •Wellington •Melbourne • Singapore*
  • 11. The Financing Mechanisms• Assessment-based (PACE) – – Debt obligation transfers with ownership – Recourse is government foreclosure on default of property taxes – Low cost of capital due to low risk profile of investment – Mortgage holder consent remains largest hurdle; uncertainty of lawsuits• Meter-based (On-Bill) – – Efficiency improvements on same bill as electricity – Recourse is shutting off power, therefore very low projected default rate – IOU without de-coupling in the business of selling electrons not saving• Off-Balance Sheet (EEPPA, MESA) – – Upfront funding securitized by installed assets – requires no government intervention however need accounting ruling – Difficult to scale as it is project by project• Vendor-financed Technology Solutions – – Require no upfront investment – Savings pay for installation and fees• Traditional Debt – – Long mortgage terms provide low cost capital – Balance sheet constraints – Transfer of ownership issues – Split incentive issues for commercial property
  • 12. PACE Commercial Consortium
  • 13. Catalyzing a Brighter Future• €500M Deployed Capital = 20K new jobs• = €2B Increase in Tax-base• = €5B Increase in Economic Activity• €2 Trillion in 10 years = EU Com Market• Jobs,Economic Stimulus, CO2 Reduction, Fossil Fuel Dependence Reduction 13
  • 14. THANK YOU Murat Armbruster GCGC Director &CWR Senior Advisormarmbruster@carbonwarroom.com